WASHINGTON — The sluggish economy won't improve for a while and could prompt a lowering of interest rates, Federal Reserve Chairman Ben Bernanke said today.
"All told, economic activity is likely to be subdued during the remainder of this year and next year," he said in a speech to the National Association for Business Economics. "In light of these developments, the Federal Reserve will need to consider whether the current stance of policy remains appropriate."
The Fed's Open Market Committee, the panel that sets rates, is scheduled to meet on Oct. 28 and 29. The current rate that banks use when they lend each other money is 2%.
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He also noted that while the prices of oil and other commodities have fallen from their highest levels, "the inflation outlook remains uncertain."
Bernanke said that government intervention, along the lines of the legislation passed by Congress last week and recent actions by the Fed was less preferable than having the private sector solve problems.
But he defended the actions as necessary because market instability and a drop in the value of assets "can take a broader toll on the economy if left unchecked."
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